Enclosed is your agenda
for the 2000 OSB House of Delegates Meeting, which will be held on Saturday,
September 23, 2000, at the Sheraton Portland Airport Hotel. It begins
at 10:00 a.m. Although only delegates may vote on the resolutions, members
are encouraged to participate in the discussion and debate of these
items. If you are unable to attend, please contact one of your delegates
to express your views on the resolutions. Delegates are listed in the
August/September issue of the Bulletin and on the bar’s
web page.

Matters that will be considered by the HOD include
a $50 increase in the annual membership fee, amendments to DR 5-106
(Mediation), DR 5-105(G) (Vicarious Disqualification of Affiliates),
ORS 9.136-9.152 (HOD term limits and membership changes), DR 1-103(E)(2)
(Disclosure of Information to Authorities), and a resolution regarding
Multidisciplinary Practice (MDP), and other important matters. The full
text and explanatory statements for all resolutions are in the enclosed
agenda. If you have any questions about the House of Delegates meeting,
contact Sandy Hise, Executive Assistant, at 800-452-8260 or (503) 620-0222,
ext. 386, or by e-mail at shise@osbar.org.

I also encourage you to attend the Annual Awards Luncheon,
which will be from 12 noon to 2:00 p.m. on Friday, September 22 at the
Sheraton Portland Airport Hotel. Tickets ($26 per person) can be obtained
by calling Jennifer Maldonado at ext. 377. Our special award honorees
are:

Award of Merit: The Honorable Mercedes Deiz, Bernard Jolles, and
William F. Schroeder

Resolved, that the 2001 annual membership feesbe increased from the year 2000 amount by $50.00 and that the Client
Security Fund assessment be unchanged from the 2000 year, and shall
be as follows:

1. Active Members.

A. For members admitted in any jurisdiction
before January 1, 1999: $371.00 for the basic membership fee;
$30.00 for the Affirmative Action Program fee; and $15.00 for
the Client Security Fund assessment; for a total of $416.00.

B. For members admitted in any jurisdiction
before January 1, 1999 who fail to pay their active fees and assessments
of $416.00 by the due date: $466.00.

C. For members admitted in any jurisdiction
on or after January 1, 1999: $314.00 for the basic membership
fee; $15.00 for the Affirmative Action Program fee; and $15.00
for the Client Security Fund assessment; for a total of $344.00.

D. For members admitted in any jurisdiction
on or after January 1, 1999 who fail to pay their active fees
and assessments of $344.00 by the due date: $386.00.

E. For those members admitted in Oregon in
2001, the fees shall be apportioned. The Client Security Fund
assessment of $15.00 shall be paid in full by each new admittee.

F. For those members who pass away in 2001,
the fees shall be apportioned upon request of appropriate representatives.
The Client Security Fund assessment of $15.00 and the increase
of fees due to payment made after the due date shall not be included
in the apportioned refund.

G. Exemptions to active member fees:

(1) Members who were admitted to practice
law in Oregon prior to January 1, 1951, are exempt from the
basic membership fee and the Affirmative Action Program fee.
These members are not exempt, based on admittance date, from
the Client Security Fund assessment and must pay the Client
Security Fund assessment of $15.00.

(2) Members who are on active military duty
in compliance with the terms of ORS 408.450 are exempt from
the payment of all active membership fees and assessments. Members
who are in the VISTA or Peace Corps programs in compliance with
Board of Governors Policy 10.302 are exempt from the payment
of all active membership fees and assessments. The payment of
active membership fees may also be waived if members satisfy
the requirements of Board of Governors Policy 10.301 on hardship
exemptions.

2. Active Emeritus Members.

A. For members admitted to practice law in
any jurisdiction before January 1, 1986, who do not engage at
any time in the practice of law except for providing annually
a minimum of 40 hours of pro bono legal services to indigent clients
referred by Oregon State Bar certified Pro Bono programs: $95.00.
The fee includes an allocation of $80.00 for the basic membership
fee and $15.00 for the Client Security Fund assessment. A listing
of programs available for participation by members in this category
shall be maintained by the Executive Director of the Oregon State
Bar.

B. For those active emeritus members who fail
to pay their active emeritus fees and assessments of $95.00 by
the due date: $120.00.

3. Active Retired.

For members admitted to practice law in Oregon
prior to January 1, 1961, who do not engage at any time in the practice
of law except for pro bono legal services to indigent clients referred
by Oregon State Bar certified Pro Bono programs, volunteer service
as bar counsel, or as a member of the SPRB or other disciplinary
entity, the same fees and assessments as established for active
emeritus members in paragraph 2 above.

4. Inactive Members.

A. The 2001 membership fee for inactive members
shall be $80.00.

B. For those inactive members who fail to
pay their fees of $80.00 by the due date: $105.00 .

C. Exemptions to inactive member fees:

(1) Members who were admitted in Oregon
prior to January 1, 1951.

(2) Members in active military duty in compliance
with the terms of ORS 408.450 are exempt from the payment of
inactive membership fees. Members who are in the VISTA or Peace
Corps programs in compliance with Board of Governors Policy
10.302 are exempt from the payment of inactive membership fees.
The payment of inactive membership fees may also be waived if
members satisfy the requirements of Board of Governors Policy
10.301 on hardship exemptions.

5. Payment Date: All fees and assessments shall
be paid simultaneously, in one remittance, not later than the due
date or within 60 days of date of admission to the Oregon State
Bar, whichever occurs last.

6. Definitions: Apportioned fees pertain only
to those members admitted in Oregon or who passed away during calendar
year 2001. If the member is admitted or passes away in January,
the apportioned fee or refund, as the case may be, shall be 12/12;
February shall be 11/12; ...; December shall be 1/12. The calculation
shall be rounded up to the nearest dollar for each fee allocation.

Whereas, Oregon Law has, since the passage in 1994
of Ballot Measure 11 [ORS section 137.700 et. seq.], mandated that juveniles
age 15 and older charged with certain offenses be automatically waived
into adult court, and

Whereas, Oregon Law has, since the passage in 1994
of Ballot Measure 11 [ORS section 137.700 et. seq.], also required that
all persons, juveniles or adults, convicted of these certain offenses,
be sentenced to serve lengthy minimum terms of imprisonment upon conviction,
without the possibility of early release, and

Whereas, mandatory minimum sentences taking sentencing
discretion away from judges, and have shifted the balance of power in
the criminal justice system by giving that power to the prosecutors,
and

Whereas, the automatic transfer of juveniles from juvenile
courts to criminal courts based solely upon the charges filed takes
judiciary discretion away from juvenile court judges, and

Whereas, Ballot Measure 94 has been certified to the
November, 2000 ballot, and

Whereas, Ballot Measure 94 would repeal Ballot Measure
11 and allow prisoners sentenced in accordance with Ballot Measure 11
to be re-sentenced, and

Whereas, the passage of Ballot Measure 94 would stop
the prison expansion in Oregon, and

Whereas, the passage of Ballot Measure 94 would return
discretion in sentencing to Oregon judges, and

Whereas, the passage of Ballot Measure 94 would also
return discretion over juvenile transfer decisions to Oregon judges,
and

Whereas, the passage of Ballot Measure 94 would also
restore the balance in the criminal justice system in Oregon,

Resolved, that Ballot Measures 94 should be
passed at the polls.

Further resolved, that the Oregon State Bar
is instructed to take reasonable steps that will assist the people of
the State of Oregon in understanding the impact of these measures by
taking the following action:

1. Transmitting the content of this resolution
to the editorial boards of the state's major newspapers and broadcast
media;

2. Sponsoring neutral educational forums to
discuss and debate these measures in various locations around the
state prior to the November 2000 election.

Items with Legislative Implication

Resolved, that the OSB House of Delegates approves
the following changes to ORS 9.136-9.152 regarding the House of Delegates.
If approved, the changes will be introduced in the 2001 legislative
session:

1. Term Limits - 9.150 Termination of a delegate’s
term.

(2) A delegate to the house of delegates
may not serve more than two consecutive three-year terms or six
consecutive years regardless of the number of terms or portion
of terms the delegate is appointed or elected to serve.

Background

The statute currently places a limit on the terms that
an elected delegate can serve. The Board of Governors recommends that
the current restriction be deleted from the statute. Elected delegates
have indicated that they would like to run for more than two terms.
Because fewer members are running for elected positions, the BOG believes
that it is in the best interest of the HOD to have active members continue
to serve the body.

(3) The chairperson of each Oregon State Bar
committee and section is an ex officio voting
delegate.

(8) An elected delegate may not serve as a member
of the board of governors, as a committee or
section chairperson or as a county bar association president during
the delegate’s term.

9.150(1) Termination of delegate’s term.

(1) The term of service of any delegate shall
end upon the death or resignation of the delegate. If the delegate
is an attorney delegate, the term of service shall end on the
date that the delegate:

(c) Takes office as a member of the board of
governors, as a chairperson of a state bar committee
or section, or as a county bar association president;
or

Background

The BOG’s Policy & Governance Committee discussed
at length the role that committee chairs play in the House of Delegates.
While the BOG believes that committee chairs enhance the diversity in
the HOD because of the BOG’s commitment to diversity in committee appointments,
it also recognizes that committees are an extension of the Board of
Governors and therefore, should not serve an independent role in the
HOD. The BOG recommends eliminating committee chairs as ex officio delegates.

(7) Elected delegates shall serve for terms
of three years. A vacancy in the office of an elected delegate
that occurs more than 18 months before the expiration
of the term shall be filled for the remainder of the term by a
delegate elected at a special election. The election shall be
held as soon as possible after the vacancy occurs. The vacancy
may be filled, for the period between the occurrence of the vacancy
and the special election, by a delegate appointed by the board
of governors. A vacancy in the office of an elected delegate that
occurs 18 months or less before the expiration of the term
shall be filled for the remainder of the term by a delegate appointed
by the board of governors.

Background

As in past years, the 2000 HOD election resulted in
an insufficient number of candidates to fill existing vacancies, specifically:

Region 1 1 candidate for 2 positions

Region 4 0 candidates for 6 positions

Region 5 12 candidates for 19 positions

Region 6 3 candidates for 6 positions

Out-of-State 0 candidates for 11 positions

ORS 9.136(7) requires that a vacancy occurring more
than 18 months before the expiration of the term be filled by a special
election. If the vacancy occurs with 18 months or less in the delegate’s
term, it is filled by a BOG appointment. To reduce the need for numerous
special elections, the board has opted in recent years to appoint delegates
to a one-year term as vacancies have arisen. Special elections are costly
and interested candidates are few. The BOG recommends that all vacancies
be filled by appointment.

4. Public Members - 9.145 Public Members

The board of governors shall appoint a public member
delegate for each region established by ORS 9.025. The elected
delegates of each of those regions shall, by majority vote, nominate
five candidates for the position of public member delegate for the district.
The nominations must be submitted to the board by June 15 of every third
year, beginning in 1996. The board shall select
appoint a one of the candidates as the public
member delegate for theeach region prior
to the annual April election. The selection must be made
by August 1 of the year the nominations are made. A public
member delegate shall serve a three-year term beginning on the third
Tuesday of April in the year of appointment. A vacant public member
delegate position shall be filled for the remainder of the term by a
delegate appointed by the board of governors.

Background

ORS 9.145 requires that public member nominations be
submitted by each in-state region by June 1. Since the HOD was instituted,
only a handful of resumes have been received for public member positions.
Last year, public members that were already serving the bar in some
capacity (fee arbitration panel, Disciplinary Board, LPRC, etc.) were
encouraged to consider serving as a HOD public member. Only a few were
interested. In addition, nominations by the regional delegates has proved
cumbersome and ineffective.

The second change regarding public members is the date
that the public member assumes office (currently August 1). Although
the Bar Act is not clear as to when elected delegates take office, the
bar has used the day after the election date as the official beginning
of terms. Elected delegates thus assume office on the day after the
election, which is held on the third Monday in April. This allows delegates
adequate time to become familiar with their responsibilities and to
study issues that will be before the HOD. The BOG recommends that the
public member delegates take office at the same time as the elected
delegates.

5. Out-of-State Delegates - 9.152 Election of
Delegates

The election of delegates to the house of delegates
shall be held on the third Monday of April each year. Nominations shall
be made by petition signed by at least 10 members of the Oregon State
Bar entitled to vote for a delegate in the election, except that
candidates for out-of-state delegates are not required to obtain signatures
for nomination. The election shall be by ballot. Nominating petitions
must be filed with the executive director of the state bar at least
30 days before the election. The executive director shall mail ballots
containing the nominations for the office of delegate in each region
to every active member in the region. The ballots must be mailed on
or before April 1 of the year of the election. Ballots may be delivered
in person or by mail to the executive director, but must be received
by the executive director on or before the day of the election. The
executive director, with any assistants that the executive director
may designate, shall canvass the votes and record the results of the
election. The candidate, or candidates if there is more than one open
position, receiving the highest number of votes in each region for theposition or positions being filled shall be declared elected. Balloting
shall be conducted in a manner that ensures that only active members
of the bar can vote and that the secrecy of the ballots shall be preserved.

Background

In the 2000 HOD election, there were no candidates
for the out-of-state delegate positions. It has proved difficult for
out-of-state Oregon attorneys to locate other out-of-state members and
obtain the required 10 signatures on their nominating petitions. The
BOG recommends that the 10-signature requirement for nominating petitions
for out-of-state delegates be eliminated.

Note: Section 20, chapter 302, Oregon Laws
1995, provides:
Sec 20. Notwithstanding section 7 of the Act [9.136], delegates
elected to the house of delegates in the first election shall serve
terms determined as follows:
(1) The executive director of the Oregon State Bar shall make a
list of the delegates elected for each region in the first election.
The list shall begin with the delegate for the region who received
the most votes. The other delegates from the region shall be listed
in descending order, based on the number of votes received.
(2) The executive director of the Oregon State Bar shall divide
the list prepared under this section for each region as closely
as possible into three equal groups. The first and second groups
shall be of equal size. The third group may be larger or smaller.
The first group of delegates, containing the delegates who received
the most votes, shall serve a term of three years. The second group
of delegates, containing the delegates who received the next highest
number of votes, shall serve a term of two years. The third group
of delegates, containing the delegates who received the lowest number
of votes, shall serve a term of one year. [1995 c.302 §20]

Background

If statutory changes are proposed, eliminate 'Note:
Section 20, chapter 302, Oregon Laws 1995' that details how delegates
were elected at the first HOD election.

Other Resolutions

Resolved, that the OSB House of Delegates and
members assembled stand for a moment of silence in honor of the members
of the Oregon State Bar whose deaths have been reported to the Bar since
the 1999 House of Delegates Meeting.

Resolved, that Disciplinary Rules 5-106 and
5-105(G) be amended to read as follows:

DR 5-106 Mediation

(A) A lawyer serving [may act]
as a mediator:

(1) shall not act as a lawyer for any party
against another party in the matter in mediation or in any related
proceeding, and

(2) [for multiple parties in any
matter if the lawyer] must clearly inform[s] the
parties of and obtain the parties’ consent to the lawyer’s
role as mediator [and they consent to this arrangement].

(B) A lawyer serving as a mediator:

(1) may [draft, and may file in court,
a settlement agreement, including a stipulated order or judgment]
prepare documents that memorialize and [to] implement the
[settlement] agreement reached in mediation,

(2) [but must advise and encourage the parties
to] shall recommend that each party seek independent
legal advice before executing [it] the documents, and

(3) with the consent of all parties, may record
or may file the documents in court.

[(C) A lawyer serving as a mediator may not represent
one party against the other in the matter in mediation or in any related
legal proceeding.]

(C) Notwithstanding DR 5-105(G), when a lawyer
is serving or has served as a mediator in a matter, a member of the
lawyer’s firm may accept or continue the representation of a party
in the matter in mediation or in a related matter if all parties to
the mediation consent after full disclosure.

[(D) A lawyer shall withdraw as mediator if any
of the parties so request, or if any of the conditions stated in DR
5-106(A) are no longer satisfied. Upon withdrawal, the lawyer shall
not continue to act on behalf of any of the parties in the matter
that was the subject of the mediation.]

(D) The requirements of (A)(2) and (B)(2)
shall not apply to mediation programs established by operation of
law or court order.

DR 5-105(G) Vicarious Disqualification of Affiliates

Except as permitted in subsections (D) and (F), when
a lawyer is required to decline employment or to withdraw from employment
under a Disciplinary Rule other than DR 2-110(B)(3), DR 5-101(A)(2),
DR 5-102(A), DR 5-106(A)(1) or DR 5-110, no other member of the
lawyer’s firm may accept or continue such employment.

Background

DR 5-106 was adopted in 1986 to eliminate concerns
that a lawyer acting as a mediator was engaged in an improper conflict
of interest situation. As expressed in OSB Formal Ethics Op. No. 1991-101,
this is because the lawyer-mediator does not, 'technically speaking,'
represent any of the parties to the mediation. On the other hand, OSB
Formal Ethics Op. No. 1991-101 indicated that drafting a settlement
agreement for the mediating parties was the practice of law.

Over the years, questions arose about the extent to
which lawyer-mediators could draft other documents to facilitate or
implement the agreement reached in mediation (for instance, a petition
and decree in a dissolution proceeding, or an easement in a real property
dispute). In 1998, the Supreme Court adopted HOD-approved amendments
to DR 5-106 to clarify that lawyer-mediators could draft 'a stipulated
order or judgment to implement the settlement agreement' and file it
in court after advising the parties to seek independent legal advice
concerning the agreement.

Subsequently, questions arose about possible unintended
consequences of the 1998 amendments including (1) whether the rule now
allows lawyer-mediators to represent the conflicting interests of the
parties to the mediation, (2) to what extent lawyer-mediators could
draft legal documents for the parties, and (3) whether the lawyer-mediator
was practicing law when drafting documents and if so, on whose behalf?

To address these concerns, further amendments to DR
5-106 were proposed, with input from OSB General Counsel’s Office, the
PLF, the ADR Section Executive Committee and the Legal Ethics Committee.
At the 1999 HOD Meeting, the amendments were voted down after lively
debate about whether they were indeed improvements to the rule or would
merely create more confusion and impose unnecessary burdens on lawyer-mediators.
Following the 1999 HOD Meeting, the Board of Governors appointed a Study
Group to review the rule in response to the concerns expressed at the
HOD debate and to recommend a proposal for submission to the HOD in
2000.

The foregoing is the product of the Study Group and
has the support of the ADR Section Executive Committee and the Legal
Ethics Committee. One obvious change is in subsection (A), where the
proposed new language recognizes that mediation is a permissible activity
for a lawyer. The limitation on the lawyer-mediator’s role is placed
at the beginning of the rule to highlight the importance of the fact
that the lawyer-mediator is not and cannot be an advocate or partisan
representative of a party in the mediation or in related matters. Subsection
(A)(2) continues the requirement that the lawyer explain and that the
parties consent to the lawyer’s role as mediator.

Subsection (B) amplifies the 1998 amendments to permit
the lawyer-mediator to prepare any documents necessary to 'memorialize
and implement' the agreement of the parties. It also continues
the requirement that the lawyer recommend that the parties seek independent
legal advice before signing documents prepared by the lawyer-mediator.
Subsection (B)(3) allows the lawyer-mediator to 'record' documents
as well as file them in court, taking into consideration all the various
kinds of matters that get mediated. However, recording or filing is
allowed only with the consent of all parties to avoid the appearance
that the lawyer-mediator is acting on behalf of one party rather than
on behalf of all parties.

Subsection (C) provides that the 'firm unit'
(DR 5-105(G)) does not apply to mediations conducted pursuant to DR
5-106 and, with the consent of the parties, allows another lawyer in
the mediator’s firm to represent a party in the mediation. To ensure
consistency in the rules, it is also proposed that DR 5-105(G) be amended
to except DR 5-106 from the rule.

Resolved, that the OSB House of Delegates approves
that the OSB develop its disciplinary rules to permit lawyers to share
fees and join with non-lawyer professionals to deliver to clients both
legal and non-legal professional services (MDP), provided that lawyers
have control and authority to assure that all other existing core values
of the legal profession for the protection of clients are maintained,
including competence, independence of professional judgment, protection
of confidential client information, loyalty to the client through avoidance
of conflicts of interest, and pro bono publico obligations; and
that all non-lawyer professionals and employees are held to the same
ethical requirements as the lawyer they are working with. If this resolution
passes, specific DR changes will be developed after consultation with
OSB General Counsel, Disciplinary Counsel, the OSB Ethics Committee,
and the Disciplinary Rules and Procedures Committee at the 2001 HOD
meeting. Any disciplinary rule changes on MDP must ultimately be approved
by the Oregon Supreme Court before going into effect.

Background

The bar's Strategic Planning Committee studied the
issue of multidisciplinary practice this past year. It came to the conclusion
that each state bar has to decide for itself whether to authorize multidisciplinary
practices and under what conditions and restrictions.

The American Bar Association House of Delegates, at
its meeting on July 10-11, 2000 in New York City, approved the following
resolution:

RESOLVED, that each jurisdiction is urged to revise
its law governing lawyers to implement the following principles and
preserve the core values of the legal profession:

1. It is in the public interest to preserve
the core values of the legal profession, among which are:

a. the lawyer's duty of undivided loyalty
to the client;

b. the lawyer's duty competently to exercise
independent legal judgment for the benefit of the client;

c. the lawyer's duty to hold client confidences
inviolate;

d. the lawyer's duty to avoid conflicts
of interest with the client;

e. the lawyer's duty to help maintain a
single profession of law with responsibilities as a representative
of clients, an officer of the legal system, and a public citizen
having special responsibility for the quality of justice; and

f. The lawyer's duty to promote access to
justice.

2. All lawyers are members of one profession
subject in each jurisdiction to the law governing lawyers.

3. The law governing lawyers was developed
to protect the public interest and to preserve the core values
of the legal profession, that are essential to the proper functioning
of the American justice system.

4. State bar associations and other entities
charged with attorney discipline should reaffirm their commitment
to enforcing vigorously their respective law governing lawyers.

5. Each jurisdiction should reevaluate and
refine to the extent necessary the definition of the 'practice
of law.'

6. Jurisdictions should retain and enforce
laws that generally bar the practice of law by entities other
than law firms.

7. The sharing of legal fees with non-lawyers
and the ownership and control of the practice of law by non-lawyers
are inconsistent with the core values of the legal profession.

8. The law governing lawyers, that prohibits
lawyers from sharing legal fees with non-lawyers and from directly
or indirectly transferring to non-lawyers ownership or control
over entities practicing law, should not be revised.

FURTHER RESOLVED that the Standing Committee on Ethics
and Professional Responsibility of the American Bar Association shall,
in consultation with state, local and territorial bar associations
and interested ABA sections, divisions, and committees undertake a
review of the Model Rules of Professional Conduct ('MRPC') and shall
recommend to the House of Delegates such amendments to the MRPC as
are necessary to assure that there are safeguards in the MRPC relating
to strategic alliances and other contractual relationships with nonlegal
professional service providers consistent with the statement of principles
in this Resolution.

FURTHER RESOLVED that the American Bar Association
recommends that in jurisdictions that permit lawyers and law firms
to own and operate nonlegal businesses, no non-lawyer or nonlegal
entity involved in the provision of such services should own or control
the practice of law by a lawyer or law firm or otherwise be permitted
to direct or regulate the professional judgment of the lawyer or law
firm in rendering legal services to any person.

FURTHER RESOLVED that the Commission on Multidisciplinary
Practice be discharged with the Association's gratitude for the Commission's
hard work and with commendation for its substantial contributions
to the profession.

As can be seen, the ABA has adopted a resolution that
restricts the potential scope of multidisciplinary practices between
lawyers and non-lawyers, consistent with the core privileges set forth
in the resolution. The Board of Governors, upon the recommendation of
the Strategic Planning Committee, proposes that the OSB House of Delegates
discuss the development of specific disciplinary rules authorizing MDPs
with non-lawyers in Oregon, consistent with core principles quite similar
to those approved by the ABA. If the board's resolution is not approved
by the OSB House of Delegates, existing restrictions prohibiting MDPs
will remain in place in Oregon. The Board of Governors’ Resolution is
essentially a request of the House to decide whether, and if so, to
what extent, MDPs shall be permitted in this state.

13. Opposes Initiative Measure
8 (Limits state appropriations to percent of prior state personal
income) and Initiative Measure 91 (Full deductibility of federal income
taxes on state income taxes) (BOG Resolution No. 6)

Whereas, the Oregon State Bar has traditionally supported
measures to improve the administration of justice in Oregon such as
reasonable compensation for public defenders, appointment of additional
judges, fair pay for judges, increased court support staff, adequate
and safe court facilities, the availability of legal services for the
poor, and a fair, efficient and adequately funded public safety and
criminal justice system; and

Whereas, the resources of state and local governments
have not been sufficient to adequately fund these Bar priorities in
the past; and

Whereas, Initiative Measure 8 limiting state appropriations
to a percent of prior state personal income would almost certainly force
a long-term cut of at least 20 percent in the Judicial Department budget;
and

Whereas, Initiative Measure 91 making federal income
taxes fully deductible on Oregon state tax returns would almost certainly
cause an immediate cut of at least 24 percent in the funding of the
Judicial Department and a long-term cut of 18 percent from present levels;
and

Whereas, passage of either Initiative Measure 8 or
91 would decimate past improvements to the administration of justice
in this state and make any further improvements virtually impossible,

Resolved, that:

1. The Oregon State Bar opposes enactment of
both Initiative Measure 8 and Initiative Measure 91; and

2. All members of the Oregon State Bar are urged
to communicate to their clients, family, staff members, and others
the gross unfairness Initiative Measure 8 and 91 would inflict on
all Oregonians by crippling the administration of justice and access
to justice in this state.

Presenter: David M. Orf

Background

The Board of Governors believes Initiative Measures
8 and 91 would have crippling effects on the administration of justice
and access to justice in Oregon if approved by the electorate in November,
2000. Approval of the proposed resolution would put the Oregon State
Bar on record as opposed to these two measures based on their adverse
effects on Oregon's justice and court systems if enacted into law.

Whereas, the House of Delegates passed a resolution
in 1999 creating a committee to study the reinstatement of the annual
meeting on a cost-effective basis; and

Whereas, Oregon State Bar president Larry Rew appointed
a committee which has reported to the Board of Governors recommending
reinstating the convention in even numbered years commencing in 2002
(in addition to the convention already held in odd numbered years);
and

Whereas, the Board of Governors has adopted the report
and its recommendation creating a two-day convention in even numbered
years in conjunction with the House of Delegates meeting:

Resolved, that:

1. The House of Delegates endorse the decision
of the Board of Governors to create a two day convention in even
numbered years in conjunction with the House of Delegates meeting;
and

2. The Board of Governors adopt reasonable specific
measurable outcomes for this event including what constitutes a
'cost-effective' meeting and communicate these outcomes
to the House of Delegates; and

3. The two-day convention in even numbered years
be continued if the reasonable outcomes specified by the Board of
Governors are met or exceeded.

Background

The Annual Meeting Study Group’s report has been distributed
to the House of Delegates. The Board of Governors, upon the recommendation
of the Annual Meeting Study Group, recommends the House of Delegates
approve the preceding resolution which would reinstate an OSB annual
meeting each year in conjunction with the annual OSB House of Delegates
Meeting. A committee would also be appointed to assist in ensuring the
2002 annual meeting was successful and to monitor whether an OSB annual
meeting can be financially viable on an ongoing basis.

Resolved, that Disciplinary Rule 1-103(E)(2)
be amended to read as follows:

(E) The provisions of DR 1-103(A) [duty to report
disciplinary rule violations]shall not apply to lawyers who obtain
such knowledge or evidence while:

(1) Acting as a member, investigator, agent,
employee or as a designee of the State Lawyers Assistance Committee;
or

(2) Acting as a board member, employee, investigator,
agent or lawyer for or on behalf of the Professional Liability
Fund, or as a Board of Governors liaison to the Professional
Liability Fund; or

(3) Participating in the loss prevention programs
of the Professional Liability Fund, including the Oregon Attorney
Assistance Program.

Background

The Board of Governors and PLF Board of Directors agreed
on a number of improvements in the oversight, governance and operation
of the Professional Liability Fund on June 30, 2000. Among other things,
the two boards increased the number of liaisons between the two boards
to three each and created a special issues committee comprised of three
members of each board to review potentially controversial PLF claims
defense strategies. The Board of Governors liaisons will also serve
as the board’s representatives on this committee.

In light of the foregoing changes and as the lawyer
members of the PLF Board are currently exempted from the duty to report
disciplinary rule violations under DR 1-103(E)(2), the Board of Governors
is requesting its lawyer member liaisons to the PLF be granted a similar
exception.

Resolved, that the Oregon State Bar House of
Delegates Rules of Procedure are amended as follows:

Add Rule 5.8: As the last item of business of the annual
meeting of the House of Delegates, an elected delegate shall be chosen
by vote to be Chief Delegate of the House of Delegates for the following
year. The duties of the Chief Delegate shall include planning and coordination
of interim meetings of Regional Delegates and assuring the orderly,
deliberative process of the House.

Add Rule 5.9: Within sixty days of the annual meeting,
upon convening by the local governor, the delegates from each region
shall elect a Regional Delegate. The first Regional Delegate shall be
elected at a meeting called for that purpose by the local OSB governor.
Thereafter the Regional Delegate is responsible for calling meetings
of the regional delegation and attending interim meetings of the Regional
Delegates of the House of Delegates.

Add Rule 5.10: The Chief Delegate and Regional Delegates
shall meet between each annual meeting of the House. One meeting shall
be with the Board of Governors to review action taken on the issues
decided at preceding annual or special meetings and one meeting shall
be with the Board of Governors to discuss agenda issues for upcoming
meetings of the House of Delegates. The Chief Delegate may convene additional
meetings of the Regional Delegates at his or her discretion. The President
shall invite the Chief Justice to interim meetings of the Chief and
Regional Delegates of the House of Delegates and the Board of Governors.

Further resolved, that notwithstanding proposed
new Rule 5.8 and existing Rule 10.1, these rules shall go into effect
immediately upon adoption and that the next order of business for this
meeting of the House of Delegates shall be the election of the chief
delegate who shall be elected by majority vote by written ballot following
the receipt of nominations for such position from the floor.

Background

This Resolution was presented to the 1998 House of
Delegates and received a majority vote. Rule 10 of the House of Delegates
at that time required a two-thirds vote for passage. Rule 10 was amended
in 1999 to require only a majority vote.

The Oregon State Bar House of Delegates has now been
in existence for five years without any structure beyond its annual
meeting. This resolution provides for some minimal interim opportunity
for discourse with the Board of Governors. This resolution will lead
to the increased dissemination of Bar information to the members.

The staffing of these proposed changes will have an
insignificant fiscal impact.

Chief Justice Carson has indicated that he will accept
the invitation to attend meetings between the House of Delegates Regional
Delegates and the Board of Governors.

17. Proposed future House
of Delegates role concerning operation of the PLF (Delegate Resolution
No. 2)

Whereas, the HOD desires to establish a role with respect
to fundamental organization and policy issues concerning the operation
of the Professional Liability Fund (the 'Fund');

Whereas, pursuant to policy decisions of the Board
of Governors (BOG), the Fund has, since its inception in 1978, been
administered by a Board of Directors (BOD) having separate authority
to administer and manage operation of the Fund, including exclusive
staff oversight (OSB Bylaw Article 15.4 and BOG Policy 14.200), but
subject to the BOG’s retained authority to appoint and remove BOD members,
and to approve the Fund’s annual assessment, coverage plan, budget,
policies and bylaws;

Whereas, from time to time there have been proposals
to fundamentally change the level of independence of the Fund’s administration,
or the BOG’s retained authority;

Whereas, this past year, in response to criticism of
a PLF claims defense strategy, such proposals were considered and rejected
to change fundamentally the administration of the Fund. Instead, through
joint and cooperative efforts, the BOG and BOD adopted improvements,
in June, to PLF policies and practices, as well as enhancements to their
respective roles;

Whereas, in the future, the HOD wishes to perform its
duties under OSB Bylaw Article 8.1 to serve as the forum for State Bar
membership 'to debate and decide matters of policy relating to
the membership or the administration of justice,' before such decisions
are made, or take effect, which would fundamentally change the current
level of independence of the PLF administration, or the current level
of the BOG’s retained authority regarding the PLF. Significant policy
issues may exist in considering:

a. Confidentiality for attorneys who self-report
potential practice errors subject to cure or who voluntarily request
and accept the personal or practice management assistance they need;

b. Attorney/client confidentiality and work
product privilege in the Fund’s claim-handling, defense and 'repair'
functions and separation from Bar functions subject to public records
laws;

c. The specialized nature of PLF 'insurer'
responsibilities, the expertise required to manage such program,
and benefits of focused administration;

d. Leadership and financial stability, clarity
of accountability for decision making and assessment monies, and
maintaining the confidence of the reinsurance market; Now Therefore,
Be It

Resolved, that

(1) The HOD commends the members of the American
College of Trial Lawyers who served on the PLF Policies and Procedures
Task Force (Payton Smith, Chair, Paul Fortino, Don Marmaduke, Ted
Runstein, and Martha Walters), the OSB BOG and PLF BOD members who
served on the Joint OSB/PLF Governance Task Force, as well as the
entire BOG and BOD for their dedicated service, diligent review,
and contributions to the cooperative and joint resolution of issues
in June, 2000;

(2) In the future, in the absence of joint agreement
between the BOG and BOD, no action to fundamentally change the current
level of independence of the PLF administration or the current level
of BOG retained authority as to the PLF shall be taken or become
effective until such changes are presented to the HOD for the purpose
of:

(a) providing the forum for Oregon State Bar
membership to debate whether such change is warranted or creates
additional policy concerns, and

(b) making the policy decisions underlying
such change;

(3) In furtherance of such role under OSB Bylaw
Article 8.1, the BOG and the BOD should fully apprise the HOD of
any issue triggering consideration of a fundamental change in the
level of independence of PLF administration or the BOG’s retained
authority over the PLF, as well as their positions, sufficiently
in advance of the scheduled HOD debate, so that meaningful and well-informed
decisions can be made.

Background

The purpose of this resolution is to establish a future
role for the HOD before fundamental changes in the current level of
independence of the PLF can be made. There are no proposed changes to
be considered under this resolution, as of its submission. The current
level of PLF independence is reflected in OSB Bylaw Article 15.4 which
provides that the '…Board of Directors of the PLF shall have sole
and exclusive authority and responsibility to operate and manage all
aspects of the PLF,' subject to change by the BOG. In addition,
BOG Policy 14.200 further sets forth a separation of management, as
between the respective staffs of both.

This past year the BOG and the PLF Board (BOD) began
independent, internal and joint reviews of PLF policies and practices
and organizational structure in response to concerns about a rarely
used 'judgment acquisition strategy,' for gaining control
of a malpractice claim and then dismissing it. The PLF, through its
CEO, made an administrative decision to not use this strategy again.
In addition, in June, the reviews led to joint decisions by both the
BOG and BOD including to require committee approval prior to use of
any potentially controversial strategy and PLF compliance with claims
handling principles consistent with the Insurance Code (previously voluntary
done); increased interaction between the BOG and BOD and their staffs
through periodic meetings, review sessions, and formal liaisons; and
some reciprocal Board member involvement in annual performance reviews
of the other’s Executive Director. The purpose of this resolution is
not to ask the HOD to review the merits of those joint decisions. It
is to express HOD support for joint resolution by the BOG and BOD, and
to commend all those who contributed to the mutually acceptable solutions.

During this process several fundamental changes in
PLF administration were considered and rejected. However, had they received
a majority vote of the BOG (8 or 9 votes) they would likely have been
reported as decisions to the HOD, without State Bar debate or input
beyond the BOG. The HOD had not previously requested to be involved.
Such proposed changes included the OSB Executive Director managing the
PLF staff and reporting on PLF operations directly to the BOG; and in
the alternative, the BOG assuming responsibility for hiring and firing
the PLF CEO. The purpose of this resolution is to establish a future
role and process for the HOD to exercise its responsibilities to attorneys
and the public under OSB Bylaw Article 8.1, specifically its State Bar
debate and policy decision responsibilities, before these types of fundamental
changes can be made.

Whereas, the current Disciplinary Rule 5-103 prohibits
forgiveness of costs advanced to a client when a contingent-fee case
is unsuccessful, thereby limiting access to the legal system for economically
disadvantaged litigants; Now Therefore, Be It

Resolved, that the Oregon State Bar House of
Delegates approves the following disciplinary rule change for submission
to the Oregon Supreme Court:

Disciplinary Rule 5 - Conflicts of Interest and Mediation

* * *

DR 5-103 Avoiding Acquisition of Interest in Litigation

(A) A lawyer shall not acquire a proprietary interest
in the cause of action or subject matter of litigation the lawyer
is conducting for a client, except the lawyer may:

(1) Acquire a lien to secure payment of fees
or expenses due or to become due.

(2) Contract with a client for a reasonable contingent
fee in a civil case, subject to the limitations imposed by DR
2-106.

(B) While representing a client in connection with
contemplated or pending litigation, a lawyer shall not advance or
guarantee financial assistance to the lawyer’s client, except that:a lawyer may advance or guarantee the expenses of litigation,
provided the client remains ultimately liable for such expenses
to the extent of the client’s ability to pay.

(1) a lawyer may advance reasonable court
costs and expenses of litigation, the repayment of which may be
contingent on the outcome of the matter; and

(2) a lawyer representing an indigent client
may pay court costs and expenses of litigation on behalf of the
client;

(3) however, a lawyer shall not encourage
public knowledge of any such payments or advancements to promote
the lawyer’s employment by any client.

Background

The proposed amendment is based upon the ABA’s Model
Rules of Professional Conduct 1.8(e) which allows the repayment of costs,
like fees, to be contingent.

Contingent fee arrangements often 'provide the
only practical means by which one having a claim against another can
economically afford, finance, and obtain the services of a competent
lawyer to prosecute a claim, and a successful prosecution of the claim
produces a fund out of which the fee can be paid.' The Lawyer’s
Code of Professional Responsibility, 66 PLI/NY 7, 19 (December 1999).

The rules against lawyers’ providing financial assistance
are based on the doctrines of maintenance and champerty. 'A champertous
agreement is one in which a person lacking an interest in another’s
litigation finances the suit for personal gain. Champerty is officious
intermeddling in litigation in which one has no interest by assisting
its prosecution with the intent to derive compensation from the proceeds
of the suit.' Dissent, State Ex Rel Okl. Bar Ass’n v. Smolen,
1992 OK 116, 837 P.2d 894 (1992)(attorney gets public censure for loaning
client living expenses). The prohibition against financial assistance
was to 'prevent the churning up of litigation, the clogging of
the courts, and to protect the people.' Id.

Rule 11 is in place to combat frivolous claims and,
in any contingent case, the lawyer already has a financial stake in
the outcome, which would not be affected by being able to forgive advanced
expenses if the case is unsuccessful.

The risk that the wealthiest firms will get all the
clients is slim, because the firm cannot advance anything beyond reasonable
court costs. Unlike rules in other states, this draft does not include
an option to advance or loan living expenses.

Instead of protecting the client from opportunists,
the current disciplinary rule prevents economically disadvantaged clients
from pursuing resolution in the legal system. These clients have to
agree to go into debt if the case is unsuccessful, and that economic
risk prevents legitimate claims from being pursued.

Under the current rule the client remains liable for
the costs and, thus, the lawyer is required to pursue the unsuccessful
client for recovery of costs and expenses advanced, or face punishment
for violation of an ethical rule.

The current provisions of DR 5-103 do not acknowledge
the reality that already exists and must exist to allow people with
limited resources to have access to the legal system.

Financial Impact/Tax Implications

The proposed amendment would not have any financial
impact upon the Oregon State Bar. However, it may affect the tax burden
of Oregon’s lawyers by allowing the deduction of those costs as business
expenses, pursuant to 26 U.S.C. §§ 161, 162.

Lawyers’ reimbursable costs are not deductible
and the expectation of reimbursement likens such advances to loans.
Canelo v. Commissioner, 447 F.2d 484, 485 (9th Cir.
1971). In Boccardo v. United States, 12 Cl.Ct. 184, 188 (1987),
when the client is required to reimburse the attorney for cost advances
made under a contingent fee contract, the advances were in the nature
of loans and could not be deducted as business expenses.

In one case the district court denied a deduction for
litigation expenses advanced by the lawyer under a net fee contract
because, under the state bar code of responsibility, the lawyer had
a right to be reimbursed by the client, regardless of the outcome of
the litigation. Milan, Miller, Berger, Brody and Miller v. U.S.,
679 F.Supp. 692, 61 A.F.T.R.2d 88-695, 88-1 USTC P 9209 (1988, DC MI).

In 1995, the Ninth Circuit, in Boccardo v. C.I.R.,
56 F.3d 1016, decided that such advances to clients for litigation costs
were deductible when the fee agreement is a gross fee contract and 'there
is no obligation on the part of the client to repay the money expended.'
Id. at 1018.

In 1999, the United States Tax Court held that litigation
costs paid on behalf of clients and then reimbursed are nondeductible
loans rather than business expenses where the repayment was not contingent
upon the outcome of the underlying case. Pelton & Gunther v.
C.I.R., 1999 WL 801399 (U.S.Tax Ct.), 78 T.C.M. (CCH) 578, T.C.M.
(RIA) 99, 339 (Oct. 8, 1999).

Summary

The amendment follows the ABA’s Model Rule that allows
repayment to be contingent upon the outcome of the case.